Do You Prefer a Gas Tax or a Miles-Driven Tax?

The hoverboard is one. So is the flying car. A peanut-butter-and-sardine sandwich would also make the list of ideas not likely to catch on.

The state of Oregon is about to discover one more: a miles-driven tax in place of a fuel tax.

The slow rise of electric and hybrid vehicles, in addition to improved fuel economy in vehicles powered by fossil fuels, has presented state governments with a new problem: how to fund roads with less money coming in from fuel taxes.

The solution is to either raise gas taxes or charge for miles driven on state roads. Oregon will be the first state in the nation to test a pay-as-you-drive road tax, which will use 5,000 volunteers to pay a tax of 1.5 cents per mile driven instead of the state’s fuel tax. This is a precursor to an alternative tax plan that could spread through Oregon and, possibly, other states in the U.S.

Is it a good idea? It depends on where you live, how much you drive, and what kind of vehicle you drive.

Oregon has a state gas tax of 30 cents per gallon. If a driver averaged 1,250 miles per month in a vehicle that averaged 17 miles per gallon, the tax paid would be about $22 per month. A miles-driven tax of 1.5 cents per mile translates to about $19 per month. Owners of cars with higher mileage numbers would end up paying more on the miles-driven plan than when paying the traditional fuel tax.

Plus, many people who pay the miles-driven tax still have to buy gas at the pump, which means they end up paying taxes twice. The government will issue refund checks to the volunteers on a monthly basis to reimburse those costs. But here’s the bigger issue: tracking the miles.

Drivers can opt for a GPS tracker to report miles, or for those who think the words “GPS” and “government” go together like peanut butter and sardines, they can choose to keep a diary and manually report miles. Either way, drivers will receive a monthly tax bill.

It all seems like a heck of a lot of extra hassle. Monthly bills, rebate checks, GPS tracking, and mile logs are a huge price to pay when compared with the ease of filling up a gas tank a few times per month.

If I were in charge, I’d risk the wrath of the citizens and simply increase the fuel tax.